Shocking Closure: Yeo Hiap Seng to Pocket $32 Million as Oatly's Singapore Factory Shuts Down!

In a surprising move that has sent shockwaves through the beverage industry, Yeo Hiap Seng has announced it will receive a whopping $32 million as exit compensation following the closure of Oatly's factory in Singapore. This decision comes in the wake of Oatly laying off 59 employees as part of its strategic shift.

On December 19, Yeo Hiap Seng detailed on its website that it had entered into an Exit Agreement with Oatly, dissolving their partnership which had been in place since 2019. Despite halting the production of oat milk for Oatly, Yeo Hiap Seng will continue to distribute Oatly products in both Singapore and Malaysia, ensuring that fans of the brand won’t miss out on their beloved oat-based beverages.

The exit compensation of S$32 million will be disbursed in installments, with the full amount expected to be settled by January 2027. Interestingly, Yeo Hiap Seng stated that the closure of Oatly’s Singapore facility is not anticipated to significantly affect the company’s net tangible assets per share, indicating a robust financial standing amid the upheaval.

Just a day before this announcement, Oatly disclosed that it would shutter its Singapore operations after just three years, citing a need to refine its future cost structure and decrease capital expenditures. The factory initially opened in October 2021, having received a hefty investment of S$30 million from Oatly, which highlights the drastic nature of this retreat from the market.

Initially, it was reported that 34 local workers would be laid off, but Yeo Hiap Seng disclosed later that the total number of affected employees had risen to 59 after a workforce reassessment. In light of these layoffs, the company has committed to providing severance packages that take into account each employee's length of service and salary. Yeo Hiap Seng has communicated with the Food and Beverage and Allied Industry Workers’ Union, ensuring compliance with Singapore’s labor guidelines.

In a generous move, Yeo Hiap Seng is also collaborating with the National Trades Union Congress’ Employment and Employability Institute to support affected workers, offering job matching services and career guidance to help them navigate their next career steps.

As the beverage sector adapts to evolving consumer preferences and economic pressures, this significant development raises eyebrows and prompts questions about the future of oat-based drinks in the region. Keep your eyes on this story—it’s only just beginning!